We lower our average Middle East urea price forecast for 2024F by ~5% from USD370/tonne to USD350/tonne (-2.2% vs 2023 and 36% higher vs the pre-COVID level). Firstly, the International Energy Agency forecasts the average gas price at USD9/MMBTU in 2024, 11% lower vs 2023, which might support higher YoY urea supply from Europe. Secondly, in January 2024, the average Middle East urea price was USD328/tonne (decreasing 7% MoM and decreasing 14% vs the Q4 2023 average), which is due to limited demand in key markets. Brazil has reduced urea purchases mainly due to slumping corn prices. Meanwhile, India’s urea purchases declined as the country is revitalizing some of its old, mothballed plants. We forecast an average Middle East urea price of USD343/tonne in Q1 2024 (-8% YoY) and USD355/tonne in Q2 2024 (+15% YoY). In our view, the drivers for higher international urea prices in Q2 2024 vs Q1 2024 should be ongoing China’s urea export restrictions announced in September 2023 (which should reduce its export YoY), tight supply from Indonesia, as well as Agriculture Price Index remaining high (46% higher vs pre-COVID-19). Additionally, Rabobank (a Dutch multinational banking and financial services company) estimates global fertilizer consumption to increase further by 5% in 2024 after recovering by 3% in 2023.

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